March 20, 2008

The Non-Bonus

Bonus – Again 

Guild members excluded

from Glocer’s 2.5 percent award

Guild members helped Reuters do well last year, so well in fact that for the second year in a row CEO Tom Glocer offered a bonus to all staff “to make sure that we all had the chance to participate in the success of the company’s signature year.” And for the second year in a row, most Guild members, and quite likely most of the company’s employees, are excluded from the deal.

The catch is right there in Glocer’s March 19 all-points e-mail: “I am therefore pleased to announce that my senior management colleagues and I have decided to make a one-off discretionary payment of 2.5 percent of base salary in the April payroll to all staff who did not participate in a bonus or commission scheme in 2007.”  (We’ve added italics to show the critical clause.)

Most Guild members, particularly those in Editorial, could be forgiven for thinking they weren’t in a bonus scheme and so were eligible for this one-time payment. Think again.

It depends on how you define bonus scheme. Our contract says, in Side Letter 3 on page 77 of the printed version, “…Reuters shall continue to offer bonus plans to Guild-represented employees….” A few of our members may be in such formal plans. Most of us are not. The contract requires that at least 50 percent of Guild workers get bonuses, but those so-called “spot” bonuses some of us receive at year’s end have no set objectives, structure or “objective criteria” that workers and bosses are supposed to discuss and agree on at the outset of the bonus period. Those who get these “spot” bonuses will tell you the amounts are nice but negligible, especially compared with 2.5 percent of annual base pay.

CATCH-22: NO WAY OUT 

If you had a chance to decline the “spot” bonus in favor of the 2.5 percent award, you’d probably take it, right? The right to decline this “spot” bonus is in Side Letter 3 too. But most managers don’t announce at the beginning of the year or quarter – or ever – that a bonus plan is being offered, so Guild members can’t exercise their right to opt out of the scheme or figure out how to qualify. That’s not just a catch. That’s Catch-22.

We think these so-called “spot” bonuses don’t meet the definition of a formal bonus scheme, not in spirit anyway. Therefore, there should be no reason to deny most Guild members the 2.5 percent discretionary award. Not surprisingly, management has a different view.

“The company rules on this were that only those who had no other bonus plan were eligible. As you know, the RAM contract dictates that at least 50 percent of covered employees should get a spot bonus each year and so the interpretation last year and this year was that RAM represented employees were therefore not eligible,” is how Editor-in-Chief David Schlesinger put it in an e-mail.

Sound familiar? It should. The only difference between this year’s offering and last was the amount: 1 percent in 2007, 2.5 percent this time. Last year, HR Vice President Glen Russo told some staffers that no more than about 50 employees in all of RAM were eligible for the 1 percent award. For a refresher on what happened last year, go to http://www.nyguild.org/ReutersNews/070309REU.htm.

Same raw deal, different year. Glocer even committed the same morale-killing PR gaffe as he did in 2007, offering what sounded like a great award for every employee who has contributed to Reuters’ success, leaving it to others to say how limited the offer really is.

Thomson-Reuters Mystery Math

In recent weeks, most Guild members who own Reuters shares or options received a 500-page prospectus detailing the Thomson acquisition, which is now set to close on April 17. (Distribution of this document has been spotty. Some haven’t gotten it. Others got multiple copies.) The terms of the deal can be tough to follow. Here’s the gist.

After the close, Reuters shares will cease to exist, and you’ll get part cash and part stock in the new Thomson-Reuters PLC for your old Reuters stock. U.S. shareholders have American Depository Shares (ADS, traded as RTRSY.O on Kobra), and each ADS is worth six ordinary Reuters shares. That’s important to know when using the online calculator that tells you how much your shares will be worth:  http://www.acceleratedshareplans.info/reuters/theacquisitionoffer.php.

When you go to the calculator page at the URL above, multiply you number of Reuters ADSs by 6 (because each one is worth six ordinary shares) and enter it in the first box, then hit Tab. The other boxes will fill in, but the amounts will be in British pounds. Convert those to U.S. dollars by going to http://finance.yahoo.com/currency.

If you have options in either SAYE or one of the other plans, those options will be exercisable immediately after the deal closes. Because in most cases you won’t have saved enough to buy them under SAYE plans, the company will sell enough shares to cover the cost. To figure out how much you’ll be getting, there’s a calculator for this specific transaction at http://www.acceleratedshareplans.info/reuters/sayeus.php.

This summary is offered only as guidance on how to figure out the value of your Reuters holdings. The Guild does not offer financial advice of any kind. That’s up to you.

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